MGT101 Midterm Preparation Modules 10-15 2022 by Rizwan Hussain

MGT 101 Important Point for Module 10-15 · Compile By Rizwan Hussain Malik · Download PDF File From Our Website · Note: · This channel is not responsible for any solved content · Chapter - 10

Fixed Assets and Depreciation Accounting

1. Depreciation Methods and Depreciation Rates

1. Selection of depreciation method depends upon the pattern of economic benefits associated to the asset

Q2. Except for reducing balance method; for all the other methods first calculate depreciable amount and then work out depreciation expense

1. Basic Accounting for Depreciation

1. Provision for depreciation is contra to asset account

Q2. Depreciation is a charge against usage of fixed asset, if nothing is mentioned then calculate depreciation on time proportion basis

1. Disposal of Fixed Assets - Accounting Entries

1. Identify the amount of accumulated depreciation till the date of disposal in accordance with depreciation basis (full year or time basis)

2. Transfer accumulated depreciation into disposal account

3. Transfer cost of asset disposed of in asset disposal

Q4. Asset sold for cash, credit or claim against insurance, the amount will be considered as disposal proceeds

1. Exchange of Asset
2. Single accounting entry for disposal of fixed asset

Provision for Depreciation Dr.

Cash-Trade in Allowance-A/R-Insurance Claim

Dr.

Income Statement (for Loss - if any)

Dr. Fixed Asset Cr.

Income Statement (For Gain - if any)

Cr.

1. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date

Chapter - 11

Control Accounts

1. Why Control Account Are Maintained

1. Control accounts are prepared in Main Ledger

Q2. Each control account is backed by a memorandum or subsidiary ledger

1. Format Debtors Control Account

1. Opening balances are placed at their side of nature

Q2. Closing balances are placed at the side opposite to their nature

1. Format Creditor Control Account

1. Opening balances are placed at their side of nature

Q2. Closing balances are placed at the side opposite to their nature

1. Contra Entries

1. Contra entry is passed in both accounts i.e., Debtors and Creditors

2. Contra entry is passed in side opposite to the nature of the account

Q3. Contra entry is passed with lower of the two outstanding amounts

1. Posting from Journal to Individual Accounts maintained in Subsidiary Ledger